In later years the charges of the Southern Pacific naturally declined. Yet the rate on brick from San Francisco to Soledad in 1892 was 5½ cents per ton per mile on a haul of 143 miles, and that to San Miguel, 64 miles farther on, was almost 5 cents per ton per mile.[366] The average receipts per ton per mile upon the Southern Pacific system were 2.04 cents per ton per mile for all freight as late as 1885, in spite of the large quantity of long distance through traffic. Plainly the average receipts on local business were much greater. There seems little doubt but that the local rates in California were always distinctly higher than in the eastern states, although they have been lowered in recent years. The reason was in the main the relatively slight density of traffic upon all except the trunk routes, as well as the higher cost of coal, and the successful control of competition to which the Southern Pacific attained.
Rate Discrimination
Turning now from the absolute level of local rates to the question of the relations which those rates bore to each other, we come to the question of discrimination in California. Railroad discrimination may be personal, in which case it involves the quoting of different rates to different persons for the same or a similar service, or it may be local, as in instances where the interests of competing localities are concerned. Either kind of discrimination is of profound social importance, for, after all, it must be remembered that the significant question for the producing and distributing interests of a state is not how much they pay for transportation, but whether this amount, be it much or little, is less than is paid by their competitors. The remainder of the present chapter will be devoted to the discussion of personal discrimination; in the next chapter the topic of local discrimination will be considered.
The policy of granting special concessions in rates to special shippers was one which the Southern Pacific followed freely whenever it seemed likely to increase the profits of the company. There was never any disposition to apologize for this—it was known to be the practice of other roads as well, and the Southern Pacific accepted the system as a matter of course. The methods employed were various. One method was that of granting passes. Mr. Stubbs explained that passes were commonly issued in cases where shippers came to the Central Pacific and represented that they were offered transportation by the company’s competitors over such competitors’ lines. “They were our patrons,” said Mr. Stubbs, “shipping our way, and I may say that wherever we were satisfied that the statement was true, we generally met the case by giving a pass!”[367]
Sudden Tariff Changes
In addition to granting passes, the Southern Pacific discriminated by changing open rates suddenly for the benefit of persons fortunate enough to be advised in advance. Mr. Stanford once explained that individual items in the company’s tariff were changed whenever by so doing the company could encourage business in any direction.[368] Indeed, a tariff would scarcely be in force ten days before the necessity for changes would be apparent.[369]
How this might work was shown in 1892, when complaint was made of discrimination in favor of the Standard Oil Company. It was then alleged that the Central Pacific was lowering oil rates from $1.25 per hundred pounds to 82½ or 90 cents, when the Standard Oil desired to make shipments from eastern refining points to the Pacific Coast, the rates being subsequently raised when the shipments had been completed. A letter to the vice-president of the Standard Oil Company, bearing upon an episode of this sort, written under date of December 4, 1888, got into the public press, and seems to establish the fact that transactions of this nature were going on. The letter follows and is self-explanatory.[370]
San Francisco, December 4, 1888
W. H. Tilford, Vice-President, Standard Oil Company,
26 Broadway, New York